Shifting Gears: How Competition in the EV Market May Redefine Luxury, Premium, and Mass-Market Segments

The automotive market of the future will build competition around user experience, perception, and emotions. We are likely to witness intriguing marketing battles and unconventional visual strategies aimed at attracting consumers. Established brands will lean heavily on their names and focus on perceived quality, though the market may not offer many technological innovations.

This is primarily due to the shift towards electric and hybrid engines, where there is little room left for engineering competition, as seen previously with internal combustion engines. Electric motors eliminate the performance gap between budget and luxury vehicles, with a budget EV capable of accelerating to 100 miles per hour in seconds, just like a premium brand vehicle – this is simply how electric motors work. If you've ever worked with power tools, you know that both expensive and inexpensive drills reach maximum speed almost instantly. The difference lies in reliability, and while this could be a competitive advantage, budget brands are unlikely to lag behind. The reliability of an electric motor depends on the number of components: an internal combustion engine has around 700 components (belts, filters, wires, etc.), while an electric motor has only about 40. The manufacturing and engineering base required to ensure quality and reliability is much smaller. Step by step, if we look at electric vehicles from an engineering perspective, we find that all brands will offer more or less the same thing – the same combination of motor types per axle, similar acceleration (which will eventually be legally restricted), and perhaps some differences in suspension to create varied driving experiences.

The focus of competition will shift from mechanical engineering to chemical engineering, where the goal is to improve battery efficiency and reduce its weight, directly impacting vehicle performance. If we set aside luxury interiors, a more efficient and lighter battery is what luxury brands might attempt to offer customers, provided they can achieve this breakthrough first. However, the large, cumbersome structures of automotive giants may struggle to compete with new market players. We are already seeing more competitors vying for the same share of the market, and established players are being forced to adapt.

How will their strategy differentiate from other brands? That's the interesting question. There will undoubtedly be differences in interior materials and design, with more expensive materials and creative designs from luxury brands. But if we look beyond luxury and consider the niche occupied by German brands, it's clear that other brands are eyeing this market share. They will eagerly invest in interior design and functionality that matches or surpasses German cars to claim a portion of the market, now that engine performance has largely equalised. Moreover, newcomers understand that a car is no longer just wheels with a gadget but rather a gadget on wheels, and they are building their strategies around this user experience, not the other way around.

Therefore, it is safe to say that competition will unfold in the following areas (but not limited to them), each with varying degrees of intensity:

Brand

Luxury:

Technical specifications are secondary in promotion; it is crucial to highlight that owning the brand’s vehicle is valuable in itself. Brands actively develop cultural and emotional narratives.

Premium:

Established players: Focus on brand strength; owning this vehicle is a matter of lifestyle and quality. Newcomers: Focus on style and novelty: a new type of vehicle, new technologies.

Mass Market:

Focus on price and value. The electric vehicle is not a luxury but accessible to everyone. Active reduction in ownership costs through additional services.

Interior

Luxury:

Exclusive materials and finishes, environmentally friendly solutions. Collaborations with luxury consumer brands and designers.

Premium:

High-quality materials, unique design solutions with attention to detail. Design and craftsmanship diversify the brand. Interior customisation is offered.

Mass Market:

Quality materials and interesting solutions that do not complicate assembly. Focus on ergonomics and functionality, balancing price and quality.

Exterior

Luxury:

Complex composite materials emphasise exclusivity. Innovative solutions such as aerodynamic elements and lighting.

Premium:

Exterior complements technical specifications. Unique solutions with attention to detail; unique body designs may be possible.

Mass Market:

Body design aims to reduce the gap with premium brands, simplified to minimise production costs.

User Experience and Ecosystems

Luxury:

The electric vehicle is a gadget on wheels. Integration with other brand products, smart home, and exclusive services (e.g., personalised assistants).

Premium:

Seamless smartphone and smart home integration. User-friendly features with advanced navigation and personalised interfaces.

Mass Market:

Integration with gadgets, basic digital solutions aimed at the mass market. Development of autopilot and access to advanced features via subscriptions.

Infrastructure

Luxury:

Collaborations with automakers to reduce the overall cost of deploying charging station infrastructure, creating premium stations and charging zones.

Premium and Mass Market:

Collaborations between automakers to create their own charging networks and provide convenient and fast solutions.

Sustainability

Luxury:

Use of eco-friendly, recycled, and exclusive materials, minimising the carbon footprint across all production and disposal stages.

Premium:

Use of eco-friendly materials, reducing greenhouse gas emissions throughout the product’s life cycle, innovations in battery disposal.

Mass Market:

Wide adoption of eco-friendly solutions, focusing on accessible and straightforward battery disposal and recycling options.

Design and Development

Luxury:

Purchasing ready-made solutions. Technologies are easier to buy; focus shifts towards brand development.

Premium:

Collaborations between automakers to reduce R&D costs, with possible customisation for clients.

Mass Market:

Standardisation of production processes to reduce costs. Mass availability of innovations and technologies through simplified development.

Enterprise Management

Luxury, Premium and Mass Market:

Improving product lifecycle management systems, production management systems, supply chain efficiency improvements, optimising and standardising production processes aimed at cost reduction, and building an enterprise business architecture to improve the management system, decision-making, and support.

Safety

Collaboration between car manufacturers. Interaction with government agencies on safety issues of new technologies, autopilot implementation and its use.

Luxury and Premium

Implementation of Level 5 autopilot, advanced crash prevention systems, Innovative driver assistance systems, predictive analytics and AI integration.

Mass Market:

Implementation of basic autopilot and driver assistance systems, becoming a standard in the mass market segment.

The passenger car market is growing at an annual rate of 6.2-6.5%, and we can expect some very interesting "battles" as companies compete for every slice of this pie. The competition will be fierce, with manufacturers not only striving for market share but also pushing innovation, customer experience, and sustainability to the forefront. This will undoubtedly lead to significant shifts in strategy as brands attempt to carve out their positions in an increasingly competitive and rapidly evolving industry.

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